Bloomberg joins the WSJ in reporting Sprint (NYSE:S) is abandoning its T-Mobile USA bid. The news service adds Sprint plans to name a new CEO as soon as tomorrow.

Dan Hesse has been Sprint's CEO since 2007. But with a T-Mobile deal apparently off the table and Sprint continuing to lose share to rivals, SoftBank's (OTCPK:SFTBF) Masayoshi Son may feel new leadership is needed.

The WSJ reports Sprint (NYSE:S) is abandoning its bid to acquire T-Mobile USA (NYSE:TMUS) due to excessive regulatory hurdles.

There were already many doubts about the ability of a Sprint/T-Mobile deal to pass muster with regulators.

If Sprint is out of the picture, the coast is clear for Iliad (OTC:ILIAF) to pursue T-Mobile, provided financing isn't an issue. There were multiple reports earlier today indicating T-Mobile is rejecting Iliad's initial $33/share offer for a 56.6% stake.

The WSJ reports T-Mobile USA (TMUS+0.8%) has rejected Iliad's (OTC:ILIAF) request for access to its books, and won't change its mind in the absence of a better bid. The FT reports a formal rejection of Iliad's $33/share offer for a 56.6% stake in T-Mobile could arrive tomorrow.

As it is, Deutsche Telekom (OTCQX:DTEGY) was reported to have liked Sprint's (S-1.4%) offer better. Sprint and parent SoftBank (OTCPK:SFTBF) are rumored to be offering ~$40/share, but their bid also carries much more regulatory risk.

Reuters reports Iliad is talking with investors for help in sweetening its offer. Sources state the carrier has engaged pay-TV providers Dish , Cox, and Charter, as well as infrastructure, pension, and sovereign wealth funds.

The news service adds DT is (not surprisingly) skeptical about Iliad's claim a merger between a French carrier and a U.S. carrier will yield $10B in synergies.

"If two of the largest companies are able to bid as one combined entity in the auction, their combined resources may have the effect of suppressing meaningful competition," says the FCC in a blog post. The post outlines a proposal by chairman Tom Wheeler that bars carriers from jointly bidding in next year's huge low-frequency spectrum auctions.

The WSJreported two weeks ago Sprint (S+1.4%) and T-Mobile (TMUS+1.4%), each of whom have a dearth of low-frequency spectrum relative to AT&T and Verizon, plan to form a JV that would raise $10B to jointly bid in the auction. The funds would be obtained through a $45B financing package SoftBank is lining up for a Sprint/T-Mobile merger.

"It’s certainly a hint that they are predisposed against a merger," says analyst Craig Moffett about the FCC's stance. Prospective T-Mobile acquirer Iliad (OTC:ILIAF) must be pleased.

Though Iliad declares its bid values the T-Mobile shares it won't own at $40.50, that figure includes $10B worth of synergies the French carrier predicts a merger will yield. Sprint and SoftBank (OTCPK:SFTBF), of course, predict their offer would also yield major synergies.

"Iliad is about a third of the size of T-Mobile US, and we don't think there would be synergies from the deal," says analyst Jonathan Chaplin. He adds a deal will be tough to finance without Iliad founder/majority shareholder Xavier Neil surrendering control.

Nonetheless, T-Mobile has rallied to $33 on news of Iliad's bid, which is bound to face less FCC/DOJ scrutiny if accepted and successfully financed.

France's Iliad (OTC:ILIAF) is offering $15B in cash for a 56.6% stake in T-Mobile USA (TMUS+7.3%) at a price of $33/share. Iliad values the remaining 43.4% at $40.50/share. Sprint (S-5.3%) has been reported to be planning a ~$40/share deal.

Iliad says it has obtained financing from unnamed banks, and would also do a capital raise to help pay for the deal. One issue: Iliad has a current market cap of just $16B, less than T-Mobile's $24.8B and Sprint's $30.6B. Sprint has reportedly lined up a $40B+ debt package to finance a T-Mobile deal.

A source tells the WSJ Iliad, which has upended the French mobile market with its aggressive pricing, views a T-Mobile merger as a "one-time opportunity to enter the world's-largest telecoms market."

Iliad also thinks (perhaps with good reason, given FCC/DOJ remarks) regulators will be more comfortable with its bid than Sprint's, since Iliad has no U.S. presence.

AT&T (T-2%) and Verizon (VZ-2.3%) have joined Sprint in selling off, as investors mull the possibility of a deal that would leave the number of nationwide U.S. carriers at 4. Concerns about Iliad's pricing history might also be weighing on shares.

The Sprint (S+1.2%) platform lost 181K postpaid subs and 542K prepaid subs in Q2, compared with losses of 231K and 364K in Q1. After factoring Nextel declines, total retail postpaid and prepaid losses were respectively 245K and 619K. 530K wholesale/affiliate subs were added.

Verizon and AT&T have delivered much better Q2 subscriber add figures (moreso for postpaid than prepaid), and would-be merger partner T-Mobile is expected to tomorrow.

However, cost controls allowed Sprint's adjusted EBITDA to rise 30% Y/Y to $1.83B (a faster growth rate than Q1's 22%), and adjusted EBITDA margin rose to 23.8% from 17.4% a year ago. Capex fell to $1.25B from $1.49B in Q1 and $1.58B a year ago. Free cash flow was still -$496M.

Wireless service revenue fell 4% Y/Y to $7.09B. Sprint platform postpaid churn was 2.05% vs. 2.11% in Q1 and 1.83% a year ago; prepaid churn was 4.44% vs. 4.33% in Q1 and 5.22% a year ago.

Windstream's (WIN+22.3%) plans to spin off some of its telecom network assets into a REIT (following a favorable IRS ruling) has lit a fire under U.S. telecom carriers, as investors bet more REIT announcements will happen. Some might also be hoping REIT spinoffs spark additional M&A activity in an industry that has seen plenty of it.

Frontier (FTR+15.8%) and CenturyLink (CTL+8.1%) are also off to the races, and AT&T (T+3.9%), Verizon (VZ+1.9%), and Sprint (S+2%) aren't doing badly either.

Windstream's spinoff will feature its fiber/copper networks and other real estate. The company expects to retire $3.2B in debt following the spinoff (expected to close in Q1 2015), and to have the REIT raise $3.5B in debt.

Windstream plans to have an aggregate annual dividend of $0.70/share following the spinoff ($0.60 for the REIT, $0.10 for Windstream proper). That's down from a current $1.00/share.

Sprint (S-3.7%) and T-Mobile (TMUS-3.1%) plan to form a JV that will raise $10B to spend on next year's giant low-frequency spectrum auction, the WSJ reports.

The funds are said to be part of the $45B financing package (previous) SoftBank (OTCMKTS:SFTBF) is lining up to enable a Sprint/T-Mobile merger (regulators permitting). T-Mobile will oversee the JV.

Two months ago, the FCC set rules limiting how much spectrum Verizon and AT&T can buy through the auction. That opens the door for Sprint and T-Mobile to grab a large chunk of the airwaves. Each has a relative dearth of low-frequency spectrum (superior for rural and in-building coverage).

Sprint currently has $26.6B in net debt, and T-Mobile roughly $9B. Shares of both companies have fallen on the report.